Macy’s, Inc. Announces November/December 2018 Sales Results

Reports Positive Holiday Comparable Sales for the Second Consecutive
Year

Revises Annual Sales and Earnings Guidance Down

January 10, 2019 08:00 AM Eastern Standard Time

CINCINNATI--(BUSINESS WIRE)--Macy’s, Inc. (NYSE:M) is announcingsalesresults for the
months of November and December 2018. The company is also providing
updated annual guidance and additional detail on anticipated fiscal 2018
performance.

“We delivered our second consecutive year of positive holiday comparable
sales, driven largely by the traction of our strategic initiatives:
Backstage, Vendor Direct, Store Pickup, Loyalty and Growth50. We
experienced another period of double-digit growth in our digital
business and continued strength in the Growth50 stores. The holiday
season began strong – particularly during Black Friday and the following
Cyber Week, but weakened in the mid-December period and did not return
to expected patterns until the week of Christmas,” said Jeff Gennette,
chairman and chief executive officer of Macy’s, Inc. “In the holiday
period, we saw strong performance across a number of categories (fine
jewelry, women’s shoes, fragrance, dresses, outerwear, active and home).
This sales growth was largely offset by: underperformance of other
categories (women’s sportswear, seasonal sleepwear, fashion jewelry,
fashion watches and cosmetics); temporary fulfillment challenges
following the fire in our West Virginia distribution center; and
underestimation of the impact of changes to our pre-Christmas earn &
redeem promotional event.”

“We are revising the guidance we provided in November and will continue
to take the necessary steps in January to ensure a clean inventory
position as we enter fiscal 2019,” Gennette continued. “Looking back at
2018, we met our goal of returning the company to growth. Our revised
guidance is above the expectations we set at the start of the fiscal
year, and we expect to deliver our fifth consecutive quarter of positive
comparable sales, including ‘comping the comp’ of the 2017 holiday
season. The North Star Strategy is gaining traction, and the entire
organization is engaged and motivated to continue improving our
performance in 2019.”

November/December 2018 Comparable Sales

November/December 2018

Comparable sales

(owned)

0.7%

Comparable sales

(owned plus licensed)

1.1%

2018 Annual Guidance

Macy’s, Inc. is revising sales and earnings guidance. The company is
also providing additional detail on the company’s anticipated annual
performance for fiscal 2018, noting that there are several weeks left in
the quarter. As the company has not completed its quarter close, the
data presented in this press release may change.

Annual diluted EPS guidance includes 37 cents, or approximately $155
million, from the gain on the anticipated sale of the former I. Magnin
building in San Francisco. However, the completion of this transaction
may shift into fiscal 2019.

Net sales guidance is provided on a 52-week basis in 2018 compared to a
53-week basis in 2017. Comparable sales guidance is provided on a
52-week basis in both 2018 and 2017. In addition, the company's 2018
results and guidance for fiscal 2018 reflect the new accounting
standards related to revenue recognition and retirement benefits.
Macy's, Inc. has recast its quarterly income statements and balance
sheets for 2016 and 2017 to reflect adoption of these new standards.
These documents can be found on the investor relations page at www.macysinc.com.

Comparable Sales Shift

Macy’s, Inc. is also providing additional detail on the impact of the 53rd
week on its reported comparable sales for fiscal 2018.

1Q18

2Q18

Spring

3Q18

Nov/Dec 2018

Comparable sales

(owned)

3.9%

0.0%

1.9%

3.1%

0.7%

Comparable sales

(owned plus licensed)

4.2%

0.5%

2.3%

3.3%

1.1%

53rd week shifted calendar

(owned plus licensed)

1.3%

2.3%

1.8%

4.1%

1.5%

Comparable sales adjusted for the impact of the 53rd week
reflect a shift of the company’s fiscal 2017 calendar to align with
fiscal 2018 on a like-for-like basis. Additionally, as previously
reported, the 53rd week in 2017 shifted the spring Friends
and Family promotion, which positively impacted first quarter 2018 owned
plus licensed comparable sales by approximately 250 basis points and
negatively impacted second quarter 2018 owned plus licensed comparable
sales by approximately 240 basis points.

Fourth Quarter Earnings Announcement

Macy’s, Inc. is scheduled to report fourth quarter sales and earnings
on February 26, 2019. Additional detail on financial performance will be
provided at that time. The company will webcast a call with financial
analysts and investors at 9:30 a.m. ET on February 26, 2019. Macy’s,
Inc.’s webcast is accessible to the media and general public via the
company's website at www.macysinc.com.
Analysts and investors may call in on 800-281-7973, passcode 2586485. A
replay of the conference call can be accessed on the website or by
calling 888-203-1112, passcode 2586485, about two hours after the
conclusion of the call.

Important Information Regarding Financial Measures

Please see the final pages of this news release for important
information regarding the calculation of the company’s non-GAAP
financial measures.

About Macy's, Inc.

Macy’s, Inc. is one of the nation’s premier retailers. With fiscal 2017
sales of $24.837 billion and approximately 130,000 employees, the
company operates approximately 690 department stores under the
nameplates Macy’s and Bloomingdale’s, and more than 180 specialty stores
that include Bloomingdale’s The Outlet, Bluemercury, Macy’s Backstage
and STORY. Macy’s, Inc. operates stores in 44 states, the District of
Columbia, Guam and Puerto Rico, as well as macys.com,
bloomingdales.com
and bluemercury.com.
Bloomingdale’s stores in Dubai and Kuwait are operated by Al Tayer Group
LLC under license agreements. Macy’s, Inc. has corporate offices in
Cincinnati, Ohio, and New York, New York.

All statements in this press release that are not statements of
historical fact are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements are
based upon the current beliefs and expectations of Macy’s management and
are subject to significant risks and uncertainties. Actual results could
differ materially from those expressed in or implied by the
forward-looking statements contained in this release because of a
variety of factors, including conditions to, or changes in the timing
of, proposed real estate and other transactions, prevailing interest
rates and non-recurring charges, the effect of federal tax reform, store
closings, competitive pressures from specialty stores, general
merchandise stores, off-price and discount stores, manufacturers’
outlets, the Internet, mail-order catalogs and television shopping and
general consumer spending levels, including the impact of the
availability and level of consumer debt, the effect of weather and other
factors identified in documents filed by the company with the Securities
and Exchange Commission. Macy’s disclaims any intention or obligation to
update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise, except as required by law.

MACY’S, INC.

Important Information Regarding Non-GAAP Financial
Measures

The company reports its financial results in accordance with U.S.
generally accepted accounting principles ("GAAP"). However, management
believes that certain non-GAAP financial measures provide users of the
company's financial information with additional useful information in
evaluating operating performance. Management believes that providing
supplemental changes in comparable sales on an owned plus licensed basis
and changes in comparable sales on an owned plus licensed basis adjusted
for the 53rd week calendar shift, which include adjusting for
growth in comparable sales of departments licensed to third parties,
assists in evaluating the company's ability to generate sales growth,
whether through owned businesses or departments licensed to third
parties, and in evaluating the impact of changes in the manner in which
certain departments are operated. In addition, management believes that
excluding certain items from diluted earnings per share attributable to
Macy's, Inc. shareholders that are not associated with the company’s
core operations and that may vary substantially in frequency and
magnitude period-to-period provides useful supplemental measures that
assist in evaluating the company's ability to generate earnings and to
more readily compare these metrics between past and future periods.

The reconciliation of the forward-looking non-GAAP financial measure of
changes in comparable sales on an owned plus licensed basis and changes
in comparable sales on an owned plus licensed basis adjusted for the 53rd
week calendar shift to GAAP comparable sales (i.e., on an owned basis)
is in the same manner as illustrated below, except that the impact of
growth in comparable sales of departments licensed to third parties is
the only reconciling item. In addition, the company does not provide the
most directly comparable forward-looking GAAP measure of diluted
earnings per share attributable to Macy’s, Inc. shareholders excluding
certain items because the timing and amount of excluded items are
unreasonably difficult to fully and accurately estimate.

Non-GAAP financial measures should be viewed as supplementing, and not
as an alternative or substitute for, the company's financial results
prepared in accordance with GAAP. Certain of the items that may be
excluded or included in non-GAAP financial measures may be significant
items that could impact the company's financial position, results of
operations or cash flows and should therefore be considered in assessing
the company's actual and future financial condition and performance.
Additionally, the amounts received by the company on account of sales of
departments licensed to third parties are limited to commissions
received on such sales. The methods used by the company to calculate its
non-GAAP financial measures may differ significantly from methods used
by other companies to compute similar measures. As a result, any
non-GAAP financial measures presented herein may not be comparable to
similar measures provided by other companies.

Represents the period-to-period percentage change in net sales from
stores in operation throughout the year presented and the
immediately preceding year and all online sales, excluding
commissions from departments licensed to third parties. Stores
impacted by a natural disaster or undergoing significant expansion
or shrinkage remain in the comparable sales calculation unless the
store, or material portion of the store, is closed for a significant
period of time. Definitions and calculations of comparable sales
differ among companies in the retail industry.

(2)

Represents the impact of including the sales of departments licensed
to third parties occurring in stores in operation throughout the
year presented and the immediately preceding year and all online
sales in the calculation of comparable sales. The company licenses
third parties to operate certain departments in its stores and
online and receives commissions from these third parties based on a
percentage of their net sales. In its financial statements prepared
in conformity with GAAP, the company includes these commissions
(rather than sales of the departments licensed to third parties) in
its net sales. The company does not, however, include any amounts in
respect of licensed department sales (or any commissions earned on
such sales) in its comparable sales in accordance with GAAP (i.e.,
on an owned basis). The amounts of commissions earned on sales of
departments licensed to third parties are not material to its net
sales for the periods presented.

(3)

Represents comparable sales on an owned plus licensed basis that
incorporates a shift of the company’s fiscal 2017 calendar to align
with fiscal 2018 on a like-for-like basis as a result of the 53rd
week in fiscal 2017.